"Nikkei 225 Plunges 16%, South Korea Drops 8%"
As Kissinger once said, being an adversary of the United States is dangerous, but being an ally of the United States can be deadly. When it comes to Japan and the United States, the first thing that comes to mind is their transoceanic friendship that spans the vast ocean.
However, in a world of turmoil, undercurrents are stirring. The United States has repeatedly raised interest rates to reap global benefits, with Japan bearing the brunt. The yen's exchange rate against the dollar has hit new lows, dealing a heavy blow to the Japanese economy. Now, with the dollar reluctant to cut interest rates, Japan is no longer considering its relationship with the United States.
According to media reports, the Bank of Japan announced that there will be another interest rate hike this year. At this critical moment, when the dollar's interest rate hikes are already showing signs of fatigue, is Japan, the United States' little brother, about to go against the grain and fire the first shot in harvesting the dollar? Just like when they crossed the vast distance to launch a surprise attack on Pearl Harbor. Now that the United States is being abandoned by many allies, the Chinese yuan is experiencing a surge, with a daily increase of a thousand points. Is the Sino-American power struggle about to reverse? The yuan may become the new safe haven.
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Is Japan leading the charge to harvest the United States?
Patience has its limits. As the United States' little brother, Japan has followed closely behind, doing its fair share of "dirty work," but when the United States enjoys its "fine wine and gourmet food," it completely forgets to share a slice of the pie with Japan. Instead, when the dollar raises interest rates, Japan becomes the first to be abandoned.
On August 5th, the Nikkei index plummeted by over 16%, while the stock indices of South Korea and Taiwan both saw a drop of more than 8%. The U.S. stock market also suffered consecutive heavy losses, with Intel's stock price plummeting by about 30%. They intended to reap benefits from China but ended up harming themselves first.
Now, as the United States attempts to reap benefits from Japan once again, completely dominating it, Japan no longer considers the "brotherly bond" between the two countries. Amidst the significant drop in the U.S. stock market, Japan announces that it does not rule out the possibility of another yen interest rate hike. Is Japan about to fire the first shot in harvesting the dollar?
In the past, Japan launched a surprise attack on Pearl Harbor. Today, the United States and Japan are still "good friends," thanks in part to Japan's role as a "turtle," enduring the United States' repeated draining of the yen, hoping to awaken the last bit of conscience in the United States.How could the self-serving American imperialism possibly take Japan seriously? The US dollar has been continuously increasing interest rates for over two years. During this period, Japan has been at the forefront, with its economy struggling to survive in a tight spot.
Either burst in silence or die in silence. Japan has suddenly awakened and no longer cares about the friendship between the US and Japan.
Although Japan had previously used the yen's interest rate hikes to alleviate the impact of the US dollar's interest rate hikes on Japan, Japan was still at a disadvantage at that time. Now, with the US stock market plummeting and the US dollar in a difficult situation, the Bank of Japan's governor announced that there is a possibility of another interest rate hike for the yen. This move undoubtedly adds insult to injury for the US dollar. Is Japan about to completely abandon the United States?
Over the past decade, investors from all over the world have been frantically borrowing money from Japan, creating an interest rate difference between Japan and the US, as well as between Japan and Europe, making the yen particularly cost-effective.
And now, when the US dollar is reluctant to lower interest rates and the US stock market is plummeting, Japan's announcement of an interest rate hike at such a critical moment is undoubtedly a fatal blow to the US dollar.
If Japan starts to raise interest rates, then hundreds of trillions of dollars and euros will have to obediently flow back to Japan. What's more alarming is that Japan's timing is so precise, just like the surprise attack on Pearl Harbor, Japan's approach is hard to admire.
You should know that, although the Federal Reserve publicly announced that the US job market is very healthy, the reality is that the US non-farm data is a big disappointment.
And what is non-farm data?
As the name suggests, non-farm data excludes agriculture.
First, we need to understand why agriculture is skipped in the data? Because compared with other industries, agriculture's ability to promote US economic growth is relatively small, it can absorb fewer employment populations, and its response speed to the overall economic situation is not sensitive enough.The so-called non-farm data actually focuses on the employment situation of those who do not engage in agricultural work. It reveals the current state of the U.S. economy by tracking three key indicators: the employment rate, the number of employed people, and the unemployment rate. This data plays a crucial role in our assessment and judgment of the U.S. economic situation. Moreover, it can directly or indirectly affect the U.S. stock market, social stability, people's living standards, and inflation expectations.
Now, the unexpected poor performance of the U.S. non-farm data implies that American companies are now starting to downsize and stop hiring, with the number of people unable to find jobs being even higher than imagined. The U.S. economy is showing initial signs of recession.
Furthermore, Japan's recent announcement of an interest rate hike has poured cold water on international market capital's confidence in the U.S. dollar. On the fourth day of August, when the Bank of Japan unexpectedly raised interest rates, dealing a heavy blow to the U.S. economy, many investment magnates on Wall Street felt that the Federal Reserve should have acted earlier. Waiting until September for a U.S. dollar rate cut seems a bit late.
Moreover, disappointingly, the U.S. non-farm employment data seems like a fuse that has ignited a bomb, slowly burning. This has plunged the U.S. financial market into panic, with even the "Oracle of Omaha" Warren Buffett continuously selling stocks, and even the "Bond King" Bill Gross expressing a pessimistic view that "it is not yet the right time to bottom fish" in the U.S. stock market.
Since the past decade, Japan has consistently implemented a negative interest rate policy, promoting the depreciation of the yen and bringing a large influx of U.S. dollars into the U.S. market. This includes the purchase of U.S. bonds and securities and other U.S. assets by both official and private investors. This move has led to a massive influx of funds into the U.S., helping it overcome numerous financial crises and even creating a period of false economic prosperity.
Now, the U.S. is facing multiple dilemmas: the poor performance of non-farm data, rising U.S. debt, and the gradual collapse of international market trust in the U.S. dollar. Japan's timely announcement of an interest rate hike seems to be a trend to withdraw the water injected into the U.S., firing the first shot in the dollar harvest.
Will the Chinese yuan become a safe haven?As the global hegemon, the United States focuses solely on immediate interests, frequently suppressing other nations. Relying on the hegemonic status of the US dollar, it uses interest rate hikes to create dollar tides that harvest globally, and the world has long suffered from the dollar's dominance. Now, Japan has fired the first shot in harvesting the United States, with multiple countries uniting to confront the dollar. The global financial market is in constant turmoil, while the Chinese yuan has appreciated by as much as a thousand points in a single day. Could the yuan become the new safe haven after the US dollar?
If the US dollar was once the object of everyone's pursuit, then the current dollar is like a rat crossing the street, being chased and beaten by everyone.
Faced with the joint sale of US debt by multiple countries, Japan goes against the trend and chooses to raise interest rates. The US stock market plummets, and the US non-farm data is a big disappointment. The US debt has broken through the 35 trillion mark, and the global financial market is in chaos. International capital is like a ship adrift in a storm, urgently seeking a safe haven.
At present, China's economy is generally showing a stable growth trend. Compared with the past, China's new momentum is growing rapidly, and the Chinese economy is also developing towards high quality.
Data shows that in the first half of 2024, China's GDP increased by 5.0% year-on-year, and the CPI rose by 0.1% year-on-year.
At this time, the US economy is falling into a slump.
On August 2, the US labor department revealed a major event. The data they released showed that the growth rate of non-agricultural job opportunities in July this year actually decreased significantly to only 114,000, and the unemployment rate also rose to 4.3%, setting a record high since last October.
This news has frightened the market, with many worrying that the US economy may fall into a recession. This panic has led to a more cautious and risk-averse global financial market, especially causing a serious blow to the US dollar.
The US dollar not only broke the key psychological threshold of 104 for the first time, but even fell to the recent low of 103.12. The weakness of the US dollar has given the yuan exchange rate the momentum to rise.
As the US dollar becomes less and less valuable, global investors are starting to look for new safe havens.Our Chinese yuan is increasingly favored by the market due to its solid economic foundation and assets priced close to the ground. Especially when the economic data from the United States is in disarray, the competitiveness of our yuan is off the charts.
Experts have analyzed that the US dollar has been continuously raising interest rates in recent years, coupled with a recovery as slow as a snail, and a real estate market that is not supportive, making our yuan's assets relatively cheaper overall, which has provided a good destination for global investors.
Now, as the US dollar is being abandoned by the world, China, in the face of suppression by American imperialism, can still maintain its pace and develop in an orderly manner. It seems that China is gradually becoming the savior of international capital.
At present, Japan has announced an interest rate hike, and both the yen and the yuan continue to strengthen. The US dollar is facing an unprecedented major change in a hundred years, and all of this is the result of America's own actions.
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